Environmental Performance Rating of Distilleries in UP

Published on 16/05/2011

First Update 16/03/2017

It is time tested by now that the future of Pollution Control and Environmental Management in any country does not rest solely on regulatory mechanisms. Voluntary and participatory mechanisms have to play bigger roles. Wastage have to be minimized, resources consumed more prudently and the urge to conserve embedded in our cultures in order to achieve the desired levels of environmental sustainability. Looking into the mirror always helps to improve and so does emulating better performers. With the regulatory mechanism severely crunched for human resources, voluntary approaches will need to pick up. The traditional regulatory approach to Pollution control, the first wave, was followed by the second wave of market based economic instruments like pollution charges, product charges, user fees, performance bonds, liability payments, non compliance fees, deposit refund schemes and tradable permits. The Water (Prevention and Control of Pollution) Cess Act , 1977 has been a very effective economic instrument in regulating the use of water. Public disclosure systems have followed as the third wave. This promised creation of better market opportunities, improvements in environmental performance, increased confidence of investors, insurers and financial institutions, improved relationships with local communities, regulators and non governmental organizations. Public disclosures also help build societies confidence and protect corporates from the fear of loosing significant economic values of good reputation.

The provision for Environmental Audit (Statement) as prescribed under the Environmental Protection Act for 1986 has great promise but has not been able to deliver. It was designed to be a tool through which corporates analyze their environmental performance in time and take suitable measures for improvement in resource consumption and waste management. Being linked to regulations, it made industry apprehensive, apprehensive of the fact that non compliance could be used to their legal disadvantage by the regulator. This introduced some amount of misreporting in order to make the report acceptable to regulatory agencies rather than helping the industry to introspect and improve. Voluntary approaches therefore, delinked to regulation therefore are assumed to play a more important role. Public disclosures of performance indicators provide powerful financial, social and reputational incentives for reducing negative externalities. It can also induce improvements from bad performers (which may otherwise require costly litigation) and introduce a system where corporate internalize reputation effects and perform better. The PROPER PROKASIH, Indonesia’s public disclosure program has been very successful in awarding good performers and calling public attention to polluters who are not in compliance with the regulations. (Regulation in the Information age-Indonesian Public Information Program in www. performeks.com/media/downloads/information_regulation.pdf) Philippines, Colombia, Mexico and Brazil have also undertaken identical programmes.

Here at home the Centre for Science and Environment has attempted a green rating of the Paper, Automobile and Chloralkali sector (The Greenest Paper Mill in India, July, 18, 1999, cseindia.org; Who is India’s Worst Paper Maker, Down to Earth, October 15, 2004 and Environmental Rating of Indian Caustic Chlorine Sector, Chandra Bhushan and Sunita Narain, C.S.E.) and ranked the major players on environmental performance . Another study done by the same organization for the cement industry pointed out that where economic logic met environmental objectives, the industry did well like in energy use and utilization of wastes but where investments did not yield short terms results the industry failed to meet expectations like in mine management, emission control and regulating livelihoods. Societally the industry was found to be dismal. (Cement: Not As Bad As We Thought, Down to Earth, December 31, 2005). Most of these studies point out that the major factors wrong with these industries is an inefficient use of resources and a poor technology base. (The Greenest Paper Mill in India, July 18, 1999, cseindia.org/node/441)

A pilot programme for environmental performance rating and public disclosure for industries was also initiated as part of a World Bank Programme and implemented collectively through the C.I.I., World Bank and the Uttar Pradesh Pollution Control Board. Both the authors to the present study were part of the study initiated in May 2001 which was coordinated from the World Bank by Mr. Carter Brandon, Dr. Smita Misra, Dr. Sushmita Dasgupta. (Also covered in Dr. Yashpal Singh, Environmental Performance Rating of Distilleries.www.oecd.org/data oecd) The programme covered 33 industries of different sizes and sectors at Ghaziabad and Noida. Industries were classified as Black and Red (implying lack of compliance) and Blue, Green and Gold (different levels of achieving compliance). Out of the 33 participating industries 6 were rated as Gold and Green, 16 rated Blue and 11 rated Black. This was a location specific compliance rating programme including small and medium enterprise also. It was not designed to be an environmental performance rating.

The Charter on Corporate Responsibility for Environmental Protection,2003 introduced through the efforts of the MoEF, the Pollution Control Boards and Industry Associations has seen a major break through in voluntary environmental performance.

In spite of the immense advantages that voluntary disclosure systems have, environmental performance rating exercises have been attempted but at a few places in India.

A pilot programme was commissioned by the U.P. Pollution Control Board in 2000 to evaluate and rate the environmental performance of the units in the Alcohol Industry. (Y. Singh, 2004, Environmental Performance Rating of Distilleries.www.oecd.org/data oecd) The study involved identification of the environmental indicators associated with the various activities in Alcohol production, understanding their environmental impacts and rating the environmental performance for intra industry comparisons by working out appropriate weightage systems for these indicators. The highlight of the study was the analysis of resource utilization efficiency of the units and its impact on environmental performance as well as profitability. The results of the study along with the names of the top 5 and bottom five performers were presented in an ‘open house’ where representatives from most of the participating distilleries were present. The report had concluded that in the case of Uttar Pradesh, the environmental performance of distilleries in western and Central Uttar Pradesh is better. Semi urban distilleries have a better performance as compared to rural based ones. Remarkably the study also revealed that improved environmental performance leads to better profitability. The industry was however observed to   exhibit insensitiveness to the use of raw materials, water, fuel, and power which results in enormous cost escalations. It was estimated that the sector could save more than Rs 100 crores per year it only the bad performers could come to the level of the best performers. The recommendations of the study were circulated and discussed in another open house. The participating distilleries had assured that they would take necessary action and improve their environmental performance.

Dr. Pradeep Kumar the prime mover behind this programme had hoped that the study would lead to better control of industrial Pollution besides improving the efficiency of units. The report was also presented by Dr. Yashpal Singh before representatives from all over the world at an International Conference on Economic Instruments held at Paris in 2004.The World Bank recognized this report as an important study and published a poster acknowledging the utility of the study. The poster also recommended that the exercise should be repeated so as to assess benefits.

It is in this context that the Distillery sector has been revisited to evaluate the impacts of the previous study. It also intends to tell the industry where it can still improve in order to earn better profits and reputation. While the earlier study looked into the performance indicators for the years 1998-99 to 2000-2001, this study covered the year 2004-05 to 2006-07.

The present report presents a comparative study of both the assessments. The Distillery sector with an installed capacity to convert over 3 million tonnes of molasses annually in U.P. is one of the major industrial sectors with a constantly growing contribution to the state exchequer by way of excise duty (Rs. 2912.90 Crores in 2004-2005, Rs. 3114.3 Crores in 2005-2006 and Rs 3518.3 Crores in 2006-2007). It also provides employment to more than 10,000 persons in the state. The industry has grown considerably over years. While there were 37 operational distilleries in U.P. (35 molasses based and 2 broken grains and malt based) out of a total of 43 distilleries in 2000-2001, 59 distilleries have been reported for 2006-2007 (56 Molasses based and 3 grain based). All these distilleries were requested to participate in the study. Out of these, 36 distilleries   participated. 24 distilleries have participated in both the 2000-2001 and 2006-2007 evaluations.

Conclusions

The study for the period 2000-2001 had indicated the following:

1.         Distilleries in central and western U.P. are marginally better performers.

2.         The semi urban distilleries were observed to perform better than the urban and rural based units.

3.         57% distilleries are located in the Ganga catchment followed by Ghagra and Yamuna. 86% of the distilleries discharge their effluents into the rivers (Ghagra-5, Gomti-1, Ganga-18 and Yamuna-6)

4.         An improved environmental performance leads to better profitability.

5.         The sector is not sensitive to the efficient use of raw materials, water, fuel and power. Optimization in raw material consumption and judicious use of water and energy shall reduce the production cost and increase profitability. This will make the product more competitive in the Global market and help the industry to maximize the capacity utilization.

6.         If the bad performers evaluate the best performers, the sector is likely to save Rs. 105.81 Crores by optimizing resource utilization (Molasses Rs. 26.95 Crores, Water Rs. 12.04 Crores, Biogas Rs. 22.50 Crores, Total Energy Rs. 45.32 Crores)

The following recommendations were made and presented before an open house session with Industry representatives and the Pollution Control Board.

1.         Eighteen out of the 33 units studied have a very poor environmental performance.

2.         All plants should have facilities to monitor the amount of biogas generated. They must also ensure to utilize the gas in boilers to meet the energy requirements. Where the biogas generation is poor, industries should retrofit the inefficient plants.

3.         Those units which have not installed the second aerobic stage should do it at the earliest.

4.         There is immense scope for reducing water consumption. This should be implemented.

5.         Metering systems should be installed to monitor consumption of biogas, water and electricity.

6.         Wherever feasible effluents should be utilized in production of bio-manure or in the case of grain based distilleries as cattle feed. Use of treated effluents for irrigation should be encouraged.

7.         Energy audit and trainings should be utilized

8.         Best available technologies should be utilized.

9.         Distilleries should be encouraged to implement ISO 14001.

Against these findings and recommendations these has been a considerable improvement in environmental performance in 2006-2007. 24 distilleries were common to both the phases of the study, 22 of these have improved by way of total environmental performance, 12 in terms of capacity utilization, 18 in terms of molasses consumption, 17 in terms of average recovery of alcohol, 18 in terms of water consumption, 10 (out 0f 22) in terms of total energy consumption, 14 (out of 22) in terms of total renewable energy consumption, 17 (out of 22) in terms of spent wash generation, 13 (out of 19) in terms of biogas generation, 18 (out of 22) in terms of dilution ratio.(Tables 2 to 10.

The repeat study has also reiterated the findings of the earlier study that an improved environmental performance leads to better profitability. There has been a considerable improvement in per capita use of resources although there is still scope for improvement. Two industries have adopted technologies based on concentration of spent wash and burning the same in better to generate steam and power for the process. These units show improved performance on all the energy indicators and have no effluent issues. Some new units installed in 2006-2007 or later are based on this technology.

Download the full document here : Distillery_Rating_UP

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